Operations Review. Retail. CK Hutchison Holdings Limited

Transcription

1 Operations Review Retail Superdrug extends Wellbeing store format to Watford High Street, Leicester and Aberdeen. 28 CK Hutchison Holdings Limited

2 Germany The Netherlands Belgium United Kingdom Ireland Czech Republic Poland Lithuania Latvia Russia Thailand Mainland China Hong Kong Taiwan South Korea Malaysia Luxembourg Turkey Ukraine Albania Hungary Singapore Macau The Philippines Indonesia Annual Report 29

3 Operations Review Retail CK Hutchison Holdings Limited

4 ICI PARIS XL has over 250 stores in the Benelux market and Germany. 2. A S Watson Group opens its flagship Watsons store in Hong Kong, marking its 12,000 th retail store in the world. 3. Celebrating its 40 th anniversary, Kruidvat now has over 1,100 stores in the Netherlands and Belgium. 4. Customers can find designer fragrances at affordable prices and professional advice from warm and friendly consultants at The Perfume Shop. 5. Trekpleister is the neighbourhood drugstore customers can count on for great value and warm service. Annual Report 31

5 Operations Review Retail The retail division consists of the A S Watson ( ASW ) group of companies, the largest health and beauty retailer in Asia and Europe in terms of store numbers. Group Performance ASW currently operates 13 retail brands with 12,400 stores in 25 markets worldwide, providing high quality personal care, health and beauty products; food and fine wines; as well as consumer electronics and electrical appliances. ASW also manufactures and distributes bottled water and other beverages in Hong Kong and the Mainland. (1) (1) Change in HK$ millions HK$ millions Change Local Currency Total Revenue 151, ,397-3% +5% EBITDA 14,838 15,549-5% +4% EBIT 12,328 13,023-5% +4% Total Store Numbers 12,400 11,435 +8% Note 1: The Reorganisation has no impact to the Retail division s results. Revenue, EBITDA and EBIT are as presented in HWL s Annual Report. The reported results for both periods are presented on a comparable basis. Total reported revenue of HK$151,903 million was 3% lower than. In local currencies, revenue increased by 5%, driven by 1.9% comparable store sales growth and an 8% increase in store numbers compared to. Excluding the one-time gain on the disposal of the airport concession operation in July, EBITDA and EBIT of HK$14,838 million and HK$12,328 million in, were 2% and 3% lower than in reported currency respectively, but were both 7% higher in local currencies. 32 CK Hutchison Holdings Limited

6 Total Revenue by Subdivision HK$ millions 150, , , , , , ,903 20,408 21,713 20,843 20,793 24% 13% 13% 23% 14% 14% 90,000 64,505 60,045 9% 9% 60,000 30,000 14,348 13,378 41% 40% ,293 35, HK$157,397 million HK$151,903 million Health & Beauty China Health & Beauty Asia Health & Beauty Western Europe Health & Beauty Eastern Europe Other Retail Change in Total Revenue HK$ millions HK$ millions Change Local Currency Health & Beauty China 21,713 20,408 +6% +9% Health & Beauty Asia 20,793 20, % +4% Health & Beauty China & Asia Subtotal 42,506 41,251 +3% +6% Health & Beauty Western Europe 60,045 64,505-7% +7% Health & Beauty Eastern Europe 13,378 14,348-7% +16% Health & Beauty Subtotal 115, ,104-3% +8% Other Retail (2) 35,974 37,293-4% -3% Total Retail 151, ,397-3% +5% - Asia 78,480 78, % - Europe 73,423 78,853-7% +9% Comparable Store Sales Growth (%) (3) Health & Beauty China -5.1% +3.9% Health & Beauty Asia +0.8% +4.6% Health & Beauty China & Asia Subtotal -2.1% +4.3% Health & Beauty Western Europe +4.0% +3.1% Health & Beauty Eastern Europe +5.9% +2.5% Health & Beauty Subtotal +2.2% +3.4% Other Retail (2) +0.4% -1.9% Total Retail +1.9% +2.3% Asia -1.0% +1.4% Europe +4.3% +3.0% Note 2: Note 3: Other Retail includes PARKnSHOP, Fortress, Watson s Wine, and manufacturing operations for water and beverage businesses. Revenue includes HK$1.1 billion from the airport concession operation which was disposed of in July. Comparable store sales growth represents the percentage change in revenue contributed by stores which, as at the first day of the relevant financial year (a) have been operating for over 12 months and (b) have not undergone major resizing within the previous 12 months. Annual Report 33

7 Operations Review Retail Group Performance (continued) Total Retail Store Numbers by Subdivision Stores 12,000 10,000 8,844 8,000 9,742 12,400 11,435 10,581 2,088 2,483 1,940 2,159 18% 4% 18% 18% 4% 20% 6,000 4,000 2, ,868 5,056 2,027 2, % Total Stores: 11,435 17% 41% Total Stores: 12,400 17% Health & Beauty China Health & Beauty Asia Health & Beauty Western Europe Health & Beauty Eastern Europe Other Retail Stores 1,200 1, , , Health & Beauty China 1, , Total Net Additions of Retail Stores by Subdivision 29% 18% -2% 9% Total Net Additions: 854 Total Net Additions: 965 Health & Beauty Asia Health & Beauty Health & Beauty Other Retail Gross Additions of Stores Western Europe Eastern Europe 46% 19% 19% -2% 23% 41% Store Numbers Change Health & Beauty China 2,483 2, % Health & Beauty Asia 2,159 1, % Health & Beauty China & Asia Subtotal 4,642 4, % Health & Beauty Western Europe 5,056 4,868 +4% Health & Beauty Eastern Europe 2,208 2,027 +9% Health & Beauty Subtotal 11,906 10,923 +9% Other Retail (4) % Total Retail 12,400 11,435 +8% - Asia 5,136 4, % - Europe 7,264 6,895 +5% Note 4: Other Retail includes PARKnSHOP, Fortress, Watson s Wine, and manufacturing operations for water and beverage businesses. 34 CK Hutchison Holdings Limited

8 EBITDA by Subdivision HK$ millions 16,000 14,000 12,000 11,814 10,000 8,000 12,779 14,158 15, ,838 4,179 4,756 1,865 1,825 12% 10% 2% 27% 12% 8% 32% 6,000 4,000 5,709 5,277 37% 12% 36% 12% 2, ,900 1,835 1,546 1, HK$15,549 million HK$14,838 million Health & Beauty China Health & Beauty Asia Health & Beauty Western Europe Health & Beauty Eastern Europe Other Retail Gain on Disposal of Airport Concession Operation Change in EBITDA HK$ millions HK$ millions Change Local Currency Health & Beauty China 4,756 4, % +16% Health & Beauty Asia 1,825 1,865-2% +5% Health & Beauty China & Asia Subtotal 6,581 6,044 +9% +13% Health & Beauty Western Europe 5,277 5,709-8% +6% Health & Beauty Eastern Europe 1,835 1,900-3% +19% Health & Beauty Subtotal 13,693 13, % +11% Other Retail (5) 1,145 1,546-26% -26% EBITDA before one-off 14,838 15,199-2% +7% Gain on disposal of airport concession operation % -100% Total Retail 14,838 15,549-5% +4% Asia 7,726 7,940-3% +0.1% Europe 7,112 7,609-7% +9% Note 5: Other Retail includes PARKnSHOP, Fortress, Watson s Wine, and manufacturing operations for water and beverage businesses. The overall health and beauty subdivision, which represents 92% of the division s EBITDA, continued to deliver strong performances in under the current challenging market conditions. EBITDA growth of this subdivision was 11% in local currencies. This reflected the successful store portfolio expansion strategies, improving margins and strong cost management in the highly resilient health and beauty store format. This strong performance was also supported by high quality new store openings with an average new store cash payback period of less than 10 months. The average capex per new store for the overall health and beauty subdivision was HK$0.9 million. Annual Report 35

9 Operations Review Retail Segment Performance Health and Beauty China Change in HK$ millions HK$ millions Change Local Currency Total Revenue 21,713 20,408 +6% +9% EBITDA 4,756 4, % +16% EBITDA Margin % 22% 20% EBIT 4,279 3, % +16% EBIT Margin % 20% 18% Total Store Numbers 2,483 2, % Comparable Store Sales Growth (%) -5.1% +3.9% The Watsons business continues to be the leading health and beauty retail chain in the Mainland. Despite a negative 5.1% comparable store sales growth, the 19% increase in store numbers and good cost control resulted in EBITDA and EBIT growth of 16% in local currency. Health and Beauty China increased its total number of stores by 395 during the year with an average new store cash payback period of less than 8 months and currently has more than 2,400 stores operating in 394 cities in the Mainland. Health and Beauty Asia Change in HK$ millions HK$ millions Change Local Currency Total Revenue 20,793 20, % +4% EBITDA 1,825 1,865-2% +5% EBITDA Margin % 9% 9% EBIT 1,515 1,545-2% +6% EBIT Margin % 7% 7% Total Store Numbers 2,159 1, % Comparable Store Sales Growth (%) +0.8% +4.6% The Watsons business is the leading health and beauty retail chain in Asia with strong brand name recognition and extensive geographical coverage. All businesses performed well in the region, except for Watsons Hong Kong which was affected by cost inflation and the declining tourist footfall in Hong Kong. Health and Beauty Asia increased its total number of stores by 219 during the year achieving an average new store cash payback period of less than 13 months. The subdivision currently has more than 2,100 stores operating in 9 markets. Health and Beauty Asia (+11%) Number of Retail Stores by Market 21% 2% 12% 21% 5% 11% 25% 24% 17% 17% 6% 17% 17% 5% Total stores: 1,940 Total stores: 2, CK Hutchison Holdings Limited Hong Kong & Macau Taiwan Singapore Malaysia Thailand The Philippines Other Asian Countries

10 Health and Beauty Western Europe Change in HK$ millions HK$ millions Change Local Currency Total Revenue 60,045 64,505-7% +7% EBITDA 5,277 5,709-8% +6% EBITDA Margin % 9% 9% EBIT 4,300 4,671-8% +5% EBIT Margin % 7% 7% Total Store Numbers 5,056 4,868 +4% Comparable Store Sales Growth (%) +4.0% +3.1% Despite the depreciation in most of European currencies, which led to a decline in results in reported currency, the health and beauty businesses in Western Europe continues to report underlying growth in local currencies during the year. This growth was mainly due to strong sales performances across all businesses in the region demonstrating strong cost management and resilience in weak market conditions. Health and Beauty Western Europe added 188 stores during and currently operates more than 5,000 stores. The average new store cash payback period of this subdivision was around 12 months. Health and Beauty Western Europe (+4%) Number of Retail Stores by Market 29% 40% 28% 40% 31% Total stores: 4,868 Germany Benelux Countries 32% Total stores: 5,056 United Kingdom and Ireland Annual Report 37

11 Operations Review Retail Segment Performance (continued) Health and Beauty Eastern Europe Change in HK$ millions HK$ millions Change Local Currency Total Revenue 13,378 14,348-7% +16% EBITDA 1,835 1,900-3% +19% EBITDA Margin % 14% 13% EBIT 1,569 1,613-3% +20% EBIT Margin % 12% 11% Total Store Numbers 2,208 2,027 +9% Comparable Store Sales Growth (%) +5.9% +2.5% In Eastern Europe, the currency depreciation, in particular Polish Zloty and Ukrainian Hryvnia, has resulted in adverse reported results for the health and beauty businesses. In local currencies, the 19% and 20% growth in EBITDA and EBIT respectively was mainly from the strong sales and margin performances reported by the Rossmann joint venture in Poland, as well as the Watsons businesses in Turkey and Ukraine. Health and Beauty Eastern Europe added 181 stores during and currently operates more than 2,200 stores in 8 markets. The average new store cash payback period in this subdivision was less than 11 months. Health and Beauty Eastern Europe (+9%) Number of Retail Stores by Market 15% 14% 8% 9% 49% 50% 19% 18% 9% Total stores: 2,027 9% Total stores: 2,208 Poland Hungary Ukraine Turkey Other Eastern European Countries 38 CK Hutchison Holdings Limited

12 Other Retail Change in HK$ millions HK$ millions Change Local Currency Total Revenue 35,974 37,293-4% -3% EBITDA (6) 1,145 1,546-26% -26% EBITDA Margin % 3% 4% EBIT (6) 665 1,086-39% -39% EBIT Margin % 2% 3% Total Store Numbers % Comparable Store Sales Growth (%) +0.4% -1.9% Note 6: EBITDA and EBIT exclude gain on disposal of airport concession operation in July of HK$350 million. This subdivision s reported total revenue, EBITDA and EBIT declined 4%, 26% and 39% respectively mainly due to the lower contributions from the PARKnSHOP operations and Fortress due to cost inflation and declining tourist footfall in Hong Kong. Other Retail currently operates over 490 retail stores in 3 markets, as well as manufactures and distributes bottled water and other beverages in Hong Kong and the Mainland. Other Retail (-4%) Number of Retail Stores by Segment 6% 7% 20% 19% 74% 74% Total stores: 512 Fast-moving Consumer Goods Consumer Electronics Total stores: 494 Wine Retailing Annual Report 39